DelCash Inc., a discount retailer, has declared and paid a dividend of $ 500 million this year. You notice, looking over their financial statements, that they have net income of $ 2 billion for this year, and that the cash balance for the firm increased by $ 250 million.

(a) If the non-cash working capital was unchanged over the year, and the firm finances 30% of its net capital expenditures from debt, estimate the net capital expenditures that DelCash had during the year.

(b) At the start of the ex-dividend day, DelCash's stock was trading at $25. By the end of the day, the stock was trading at $23.20. If the typical stockholder in DelCash paid 40% on dividend income and 20% on capital gains taxes which can be deferred for 5 years at an opportunity cost of 8%, estimate the number of shares outstanding in the firm.

(c) Assume that DelCash Inc.'s debt is in the form of corporate bonds. How would you expect the bonds to react to the announcement?